More cities in China experienced cooling property prices in June, compared to May, as policies targeting speculation kicked in.

Property prices fell in 12 of the 70 major cities monitored, and remained unchanged in 14, when measured against May’s figures, the National Bureau of Statistics said.

In May, there were 20 cities where property prices either fell or remained unchanged when measured against the previous month.

But prices in Beijing, Shanghai and Guangzhou — the bellwethers of the property market — all showed solid year-on-year gains in June, according to the NBS.

The scale of the June increase was slightly higher than in May.

Only three cities experienced a year-on-year price drop in June.

Larger year-on-year gains were seen mostly in smaller and less-developed cities.

Urumqi, capital of the Xinjiang Uyghur autonomous region, posted the biggest gain at 9.2 percent in June. Prices in Lanzhou, capital of Gansu province, rose 8.2 percent year-on-year.

“The data explain why the government plans to extend real estate curbs from key cities to second- and third-tier cities,” Qin Xiaomei, chief researcher at international real estate service provider, Jones Lang LaSalle, said.

The State Council, or China’s Cabinet, said last week it will expand restrictions on home purchases from major cities to smaller ones to tackle escalating property prices. The government is drawing up a list of the smaller cities, China Business News reported on Monday, citing an unidentified source close to the Ministry of Housing and Urban-Rural Development.

The planned expansion of tightening measures is a “wakeup call” for developers hoping that policies may relax in the second half of this year, Credit Suisse Group AG said in a recent research note.

According to Frank Liu, vice president of E-Commercial Real Estate Advisory Co. Ltd., some developers have experienced diminishing cash flow.

On June 15, Standard & Poor’s cut the outlook for developers to “negative” from “stable,” adding tighter credit and further government curbs may lead to rating downgrades in the coming year.

Developers have large inventories allowing more flexibility in prices, Liu said.

Stephen Green, an economist with Standard Chartered Bank, said in a recent survey that property inventories in 35 major cities currently stand at about three months’ worth of supply, levels not seen since the worst of the market slump in 2008-2009.

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